Economics Final Exam (correct answers)
Economics correct answers the study of how people seek to satisfy their needs and
wants by making choices
Horizontal Merger correct answers the combination of two or more firms competing in
the same market with the same good or service
Vertical Merger correct answers the combination of two or more firms involved in
different stages of producing the same good or service
Shortage correct answers a situation in which a good or service is unavailable
Scarcity correct answers limited quantities of resources to meet unlimited wants
Factors of Production correct answers land, labor, and capital; the three groups of
resources that are used to make all goods and services
Entrepreneur correct answers ambitious leader who combines land, labor, and capital to
create and market new goods or services
Trade-Off correct answers the alternative we sacrifice when we make a decision
Opportunity Cost correct answers the most desirable alternative given up as the result
of a decision
Human Capital correct answers the skills and knowledge gained by a worker through
education and experience
Physical Capital correct answers all human-made goods that are used to produce other
goods and services; tools and buildings
Thinking at the Margin correct answers deciding whether to do or use one additional
unit of some resource
Production Possibility Graph correct answers a graph that shows alternative ways to
use an economy's resources
Production Possibility Frontier correct answers the line on a production possibilities
graph that shows the maximum possible output for a specific economy
Adam Smith correct answers classic economist that believed the market could regulate
itself
Classical Economics correct answers the idea that free markets can regulate
themselves
, Free Market correct answers individuals and privately owned businesses own the
factors of production and therefore, make what they want and buy what they want
Command Economy correct answers economic system in which the central government
makes all of the decisions on the production and consumption of goods and services
Mixed Economy correct answers economic system that combines tradition and free
market with limited government involvement
Natural Monopoly correct answers a market that runs most efficiently when one large
firm supplies all of the output
Perfect Competition correct answers a market structure in which a large number of firms
all produce the same product
Monopolistic Competition correct answers a market structure in which many companies
sell products that are similar but not identical
Non-price Competition correct answers a way to attract customers through style,
service, or location, but not a lower price
Cartel correct answers a formal organization of producers that agree to coordinate
prices and production
Sherman Anti-Trust Act correct answers law that outlawed mergers and monopolies that
limit trade between states
Clayton Anti-Trust Act correct answers law that outlawed practices that limit competition
or lead to monopoly
Sole Proprietorship correct answers a business owned and managed by a single
individual
General Partnership correct answers partnership in which partners share equally in both
responsibility and liability
Limited Partnership correct answers partnership in which only one partner is required to
be a general partner
Corporation correct answers a legal entity owned by individual stockholders
Law of Demand correct answers economic law that states that consumers buy more of
a good when its price decreases and less when its price increases
Economics correct answers the study of how people seek to satisfy their needs and
wants by making choices
Horizontal Merger correct answers the combination of two or more firms competing in
the same market with the same good or service
Vertical Merger correct answers the combination of two or more firms involved in
different stages of producing the same good or service
Shortage correct answers a situation in which a good or service is unavailable
Scarcity correct answers limited quantities of resources to meet unlimited wants
Factors of Production correct answers land, labor, and capital; the three groups of
resources that are used to make all goods and services
Entrepreneur correct answers ambitious leader who combines land, labor, and capital to
create and market new goods or services
Trade-Off correct answers the alternative we sacrifice when we make a decision
Opportunity Cost correct answers the most desirable alternative given up as the result
of a decision
Human Capital correct answers the skills and knowledge gained by a worker through
education and experience
Physical Capital correct answers all human-made goods that are used to produce other
goods and services; tools and buildings
Thinking at the Margin correct answers deciding whether to do or use one additional
unit of some resource
Production Possibility Graph correct answers a graph that shows alternative ways to
use an economy's resources
Production Possibility Frontier correct answers the line on a production possibilities
graph that shows the maximum possible output for a specific economy
Adam Smith correct answers classic economist that believed the market could regulate
itself
Classical Economics correct answers the idea that free markets can regulate
themselves
, Free Market correct answers individuals and privately owned businesses own the
factors of production and therefore, make what they want and buy what they want
Command Economy correct answers economic system in which the central government
makes all of the decisions on the production and consumption of goods and services
Mixed Economy correct answers economic system that combines tradition and free
market with limited government involvement
Natural Monopoly correct answers a market that runs most efficiently when one large
firm supplies all of the output
Perfect Competition correct answers a market structure in which a large number of firms
all produce the same product
Monopolistic Competition correct answers a market structure in which many companies
sell products that are similar but not identical
Non-price Competition correct answers a way to attract customers through style,
service, or location, but not a lower price
Cartel correct answers a formal organization of producers that agree to coordinate
prices and production
Sherman Anti-Trust Act correct answers law that outlawed mergers and monopolies that
limit trade between states
Clayton Anti-Trust Act correct answers law that outlawed practices that limit competition
or lead to monopoly
Sole Proprietorship correct answers a business owned and managed by a single
individual
General Partnership correct answers partnership in which partners share equally in both
responsibility and liability
Limited Partnership correct answers partnership in which only one partner is required to
be a general partner
Corporation correct answers a legal entity owned by individual stockholders
Law of Demand correct answers economic law that states that consumers buy more of
a good when its price decreases and less when its price increases
